Proposal for a COUNCIL DIRECTIVE amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation
Date: 2013-06-12
Institutions: European Commission
Subjects: European cooperation, administrative cooperation, exchange of information, supervisory power, tax avoidance, tax evasion

EUROPEAN 
COMMISSION 

Brussels, 12.6.2013  
COM(2013) 348 final 

2013/0188 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2011/16/EU as regards mandatory automatic exchange of 
information in the field of taxation  

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

In  recent  years,  the  challenge  posed  by  tax  fraud  and  tax  evasion  has  increased 
considerably  and  has  become  a  major  focus  of  concern  within  the  European  Union 
and  worldwide.  Billions  of  euros  are  being  lost.  By  reducing  fraud  and  evasion 
Member  States  could  increase  tax  revenues  which  would  also  provide  them  with 
added scope to restructure their tax systems in a way that better promotes growth as 
outlined  in  the  2013  Annual  Growth  Survey.  In  addition,  given  the  order  of 
magnitude of the challenge, stepping up the fight against tax fraud and evasion is not 
only an issue of revenue, but also of fairness. Particularly in these difficult economic 
times, honest taxpayers should not suffer additional tax increases to compensate for 
revenue losses incurred due to tax fraudsters and evaders.  

For years, the European Union (EU) has been working actively on these problems, in 
particular by adopting specific legal instruments to implement automatic exchange of 
information  ("AEOI")  within  the  Union.  The  EU  Savings  Directive  (the  "EUSD") 
ensures  AEOI  on  interest  income  and  a  proposal  to  enlarge  its  scope  is  under 
discussion in the Council. The Directive on Administrative Cooperation (the "DAC") 
ensures  that,  from  2015,  Member  States  will  exchange  information  automatically 
upon  availability  on  five  categories  of  income  and  capital:  employment,  directors' 
fees, life insurance products not covered by other Directives, pensions and ownership 
of and income from immovable property.  

Member  States  have  now  expressed  a  clear  wish  to  go  beyond  current  levels  of 
cooperation.  The  European  Council  of  2  March  2012  invited  the  Council  and  the 
Commission to develop rapidly concrete ways to improve the fight against tax fraud. 
On  6  December  2012,  the  Commission  presented  an  Action  plan  to  strengthen  the 
fight  against  tax  fraud  and  tax  evasion1.  The  Action  Plan  highlights  the  need  to 
promote  AEOI  as  the  European  and  international  standard  of  transparency  and 
exchange  of  information  in  tax  matters.  On  14  May  2013,  the  ECOFIN  Council 
adopted  conclusions  welcoming  the  work  by  the  Commission  on  developing 
measures  to  combat  tax  fraud,  tax  evasion  and  aggressive  tax  planning  and 
recognising the useful role the Commission Action Plan can play in this regard2.  

The European Council on 22 May 2013 went even further, requesting the extension 
of  AEOI  at  EU  and  global  levels  with  a  view  to  fighting  against  tax  fraud,  tax 
evasion  and  aggressive  tax  planning.  On  that  occasion,  the  Commission  committed 
itself  to  proposing  amendments  to  the  DAC  in  June  2013  in  order  to  expand  the 
scope of AEOI, in anticipation of the revision of the DAC already foreseen for 2017. 

The objective of the present proposal is, therefore, to expand the scope of AEOI in 
the  EU  beyond  that  provided  for  in  existing  EU  automatic  information  exchange 
arrangements. It would bring the following other items within the scope of the AEOI: 
dividends, capital gains, other financial income and account balances. The provision 
for a review and expansion of the DAC in 2017 would remain. However, in line with 
the objective of enhancing AEOI the removal of the condition of availability would 
now  be considered at that time in  respect of all five existing categories together so 

COM(2012)722 final. 
Council Conclusions on tax fraud and tax evasion of 14 May 2013 (doc. 9549/13 – FISC 94 – ECOFIN 
353). 

1. 

1. 

2. 

3. 

4. 

5. 

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that the DAC would cover the full range of income. Furthermore, the categories to be 
considered  for  inclusion  at  that  time  would  be  amended  in  the  light  of  the  present 
proposal  (see  below).  Extending  the  scope  of  the  AEOI  would  also  contribute  to 
ensuring  equality  of  treatment  between  different  types  of  assets  and  to  avoiding 
undesirable reallocation of portfolios. 

The Commission proposes to remove the reference in Article 8(3) of the Directive to 
a threshold below which a Member State may not wish to receive information from 
other Member States. Discussions have revealed that such a threshold is not practical 
for  the  Member  States  that  are  required  to  report.  However,  a  Member  State  could 
continue to opt not to receive any information on a particular category of income. 

An EU initiative is needed both from an internal market perspective and in terms of 
efficiency and effectiveness:  

6. 

7. 

– 

– 

– 

– 

– 

An  EU  initiative  ensures  a  coherent,  consistent  and  comprehensive  EU-wide 
approach  to  AEOI  in  the  internal  market.  It  would  mean  a  single  reporting 
approach across Member States which would lead to costs savings both for tax 
administrations and economic operators (see also point 11 below). 

An EU legal instrument would also ensure certainty for tax administrations and 
economic operators within the EU. 

An  EU  legal  instrument  would  contribute  to  the  development  of  the 
international standard of AEOI. 

An  EU  legal  instrument  based  on  the  DAC  would  involve  the  use  of  the  IT 
arrangements  already  in  place  or  under  development  to  facilitate  information 
reporting under the EUSD and the DAC. Under those Directives, EU Member 
States  share  information  in  specific  formats  using  a  specific  communication 
channel (the CCN/CSI system). These formats could easily be extended so as 
to  be  usable  also  for  the  additional  items  now  proposed  for  inclusion.  As 
Member States have invested considerable time and money in developing these 
formats, there would be economies of scale if Member States also exchanged 
information on the new items using these formats. 

Furthermore, the Council already committed itself, in Article 8(5) of the DAC, 
to  consider  in  due  course  whether  automatic  information  exchange  should  be 
extended,  on  the  basis  of  an  EU-wide  legal  instrument,  to  cover  other 
categories of income such as dividends and capital gains. The present proposal 
is, therefore, merely accelerating work in line with this commitment. 

8. 

9. 

The  agreements  that  many  governments  have  concluded  or  will  conclude  with  the 
US as regards the US Foreign Account Tax Compliance Act (FATCA)3 have given 
further impetus to AEOI as a way of combating tax fraud and evasion.  

On 9 April 2013, France, Germany, the United Kingdom, Italy and Spain announced 
plans for a pilot action on AEOI using the FATCA model agreed with the US as a 
basis. These Member States also called on Europe to take a lead in promoting AEOI 
in the world and expressed the wish to discuss how progress could be made within 
the EU on improving tax information exchange between all Member States.  

3 

http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx 

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10. 

11. 

Article 19 of the DAC states that a Member State that provides wider cooperation to 
a  third  country  may  not  refuse  to  provide  such  wider  cooperation  to  any  other 
Member State wishing to enter into such mutual wider cooperation with that Member 
State. The fact that Member States have concluded or will conclude agreements with 
the  US  as  regards  FATCA  means  that  they  provide  for  a  wider  cooperation  within 
the meaning of that provision.  

Expanded AEOI on the basis of an EU-wide legislative instrument would remove the 
need and incentive for Member States to invoke Article 19 of the DAC, with a view 
to concluding bilateral or multilateral agreements that may be considered appropriate 
on  the  same  subject  in  the  absence  of  relevant  Union  legislation.  The  scenario  of 
various agreements concluded under that provision would, in fact, present a number 
of disadvantages, compared to a solution brought about by EU action:  

– 

– 

– 

The  level  playing  field  between  the  Member  States  might  be  put  at  risk  if 
Member States agreed to cooperate on increased AEOI in different ways. This 
could  lead  to  distortions  and  artificial  flows  of  capital  within  the  internal 
market.  

If  the  agreements  between  Member  States  were  not  identical,  this  could  also 
create  difficulties  for  economic  operators  that  are  active  in  several  Member 
States  as  they  could  then  face  different  compliance  requirements  in  different 
Member States.  

It  might  also  mean  that  Member  States  would  not  be  able  to  utilise  the  IT 
reporting systems that have been developed within the EU (see above).  

12. 

Timely adoption and implementation are crucial so as to reap the benefits as quickly 
as  possible.  In  order  to  ensure  consistency  with  the  deadline  for  the  application  of 
AEOI to the categories of income and capital already covered by the DAC, the time 
limits proposed for transposition and application of the new rules are 31 December 
2014 and 1 January 2015, respectively.  

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

In  addition  to  the  discussions  held  in  the  Council  of  Ministers  since  April  2013  (see  above 
under item 1), the Commission held a technical meeting with Member States on 21 May 2013 
to  confirm  the  need  for  a  legislative  proposal  and  to  discuss  its  practical  modalities  and 
content. 

The  discussions  revealed  that  Member  States  generally  supported  the  need  for  enhancing 
automatic information exchange and for accelerating the extension of the scope of Article 8 of 
the DAC as already envisaged in Article 8(5). 

Most Member States wish to take speedy action to increase AEOI but uncoordinated action by 
Member  States  on  this  matter  could  lead  to  potentially  lasting  fragmentation  in  the  internal 
market. It has, therefore, become exceptionally urgent to provide for a consistent and coherent 
EU legal framework; for this reason, no impact assessment has been prepared.  
The  European  Parliament  adopted  a  resolution  on  21  May  20134,  whereby  it  welcomes  the 
Commission Action Plan and its Recommendations, urges Member States to follow up their 

4 

European Parliament Resolution of 21 May 2013 on fight against tax fraud, tax evasion and tax havens 
(Kleva Report) – 2013/2025(INI). 

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commitments and embrace the Commission's action plan, as well as emphasises that the EU 
should take a leading role in discussions on the fight against tax fraud, tax avoidance and tax 
havens and, in particular, in relation to the promotion of automatic exchange of information.  
The European Economic and Social Committee also adopted an opinion on 17 April 20135. 
The  Committee  endorses  the  Commission's  Action  Plan  and  supports  its  efforts  to  find 
practical solutions as regards reducing tax fraud and tax evasion. In particular, it supports in 
points 4.6 and 4.7 the Commission's initiatives as regards the improvements in relation to the 
AEOI. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

The  proposal  aims  at  modifying  Article  8  of  the  current  DAC.  The  modifications  are 
contained in Article 1 of the proposal. 

The  first  modification  concerns  paragraph  3  of  Article  8.  The  proposal  is  to  remove  the 
reference  to  a  threshold  below  which  a  Member  State  may  not  wish  to  receive  information 
from other Member States. Discussions with Member States revealed that such a threshold is 
not practically manageable. In addition, it is proposed to insert the expression "one or several 
of" before the term "the categories"; this would prevent misunderstandings in a case where a 
Member  State  indicates  that  it  does  not  wish  to  receive  information  on  one  or  several 
categories  of  income  and  capital  referred  to  in  paragraph  1  even  if  it  does  want  to  receive 
information on others. 

It is proposed to introduce, by way of a new paragraph 3a of Article 8, automatic exchange of 
information for dividends, capital gains, any other income generated with respect to the assets 
held in a financial account, any amount with respect to which the financial institution is the 
obligor (i.e. is legally or contractually obliged to pay) or the debtor, including any redemption 
payments,  and  account  balances.  These  additional  items  relate  to  income  paid  directly  or 
indirectly  to  beneficial  owners  who  are  natural  persons,  as  defined  by  Article  3(11)(a)  of 
Directive 2011/16/EU, or capital held directly or indirectly by such persons. It is not proposed 
to  extend  to  the  new  items  the  existing  condition  provided  for  in  Article  8(1)  in  respect  of 
income  currently  included  in  the  Directive,  which  is  that  the  information  only  has  to  be 
exchanged if it is "available". Information about those new items will certainly be available as 
financial  intermediaries  will  be  required  to  report  it  to  tax  administrations  under  the 
agreements  that  Member  States  have  concluded  or  will  conclude  with  the  US  as  regards 
FATCA.  

Regarding paragraph 5 of Article 8, the following changes are proposed:  

– 

– 

5 

In the first subparagraph, a reference is made to the new paragraph 3a and the review 
of the condition of availability will concern all five categories listed in paragraph 1 
(instead of only three of them); 

In  point  (b)  of  the  second  subparagraph,  the  reference  to  "dividends  and  capital 
gains" as matters to be considered for future addition to the Directive is removed as 
these categories are now added in the new paragraph 3a; "other categories and items, 
including royalties" (royalties is already quoted in the existing text) is substituted so 
as to leave more open the scope of a new proposal in 2017. 

European Economic and Social Committee Opinion of 17 April 2013 on the Communication from the 
Commission to the European Parliament and the Council - An action plan to strengthen the fight against 
tax fraud and tax evasion COM(2012) 722 final (Dandea Report) – CESE 101/2013. 

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Article 2 contains the usual provision compelling Member States to transpose the Directive. 
The time limits proposed for transposition and application of the new rules are 31 December 
2014  and  1  January  2015  respectively,  in  order  to  align  them  with  the  dates  applicable  in 
respect  of  the  categories  of  income  and  capital  included  in  Article  8.1  of  the  existing 
Directive.  

4. 

BUDGETARY IMPLICATION  

The proposal does not entail budgetary implications. This applies in particular in regard to the 
use of IT tools, since the tools under development will also be used for the implementation of 
this Directive. 

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2013/0188 (CNS) 

Proposal for a 

COUNCIL DIRECTIVE 

amending Directive 2011/16/EU as regards mandatory automatic exchange of 
information in the field of taxation  

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 115 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 
Having regard to the opinion of the European Parliament6,  
Having regard to the opinion of the European Economic and Social Committee7,  

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

In  recent  years,  the  challenge  posed  by  tax  fraud  and  tax  evasion  has  increased 
considerably and has become a major focus of concern within the Union and at global 
level. Unreported and untaxed income is considerably reducing national tax revenues. 
An increase in the efficiency and effectiveness of tax collection is therefore urgently 
needed.  The  automatic  exchange  of  information  constitutes  an  important  tool  in  this 
regard and the Commission in its Communication of 6 December 2012 containing an 
Action plan to strengthen the fight against tax fraud and tax evasion8 highlighted the 
need  to  promote  vigorously  the  automatic  exchange  of  information  as  the  future 
European and international standard for transparency and exchange of information in 
tax  matters.  The  European  Council  on  22  May  2013  requested  the  extension  of 
automatic information exchange at Union and global levels with a view to combatting 
tax fraud, tax evasion and aggressive tax planning. 

Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in 
the  field  of  taxation  and  repealing  Directive  77/799/EEC9  already  provides  for  the 
mandatory  automatic  exchange  of  information  between  Member  States  on  certain 
categories  of  income  and  capital.  It  also  establishes  a  step-by-step  approach  to 
reinforcing  automatic  exchange  of  information  by  its  progressive  extension  to  new 
categories of income and capital and the removal of the condition that the information 
only has to be exchanged if available. 

(3) 

As  highlighted  by  the  request  of  the  European  Council,  it  is  appropriate  to  bring 
forward the extension of automatic information exchange already envisaged in Article 

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OJ C , , p. . 
OJ C , , p. . 
COM(2012)722 final. 
OJ L 64, 11.3.2011, p.1. 

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8(5)  of  Directive  2011/16/EU.  A  Union  initiative  ensures  a  coherent,  consistent  and 
comprehensive Union-wide approach to the automatic exchange of information in the 
internal  market  which  would  lead  to  cost  savings  both  for  tax  administrations  and 
economic operators.  

The  fact  that  Member  States  have  concluded  or  have  expressed  an  intention  to 
conclude  agreements  with  the  United  States  of  America  relating  to  its  legislation  on 
Foreign  Account  Tax  Compliance  (commonly  referred  to  as  "FATCA")  means  that 
they  are  providing  or  will  provide  for  a  wider  cooperation  within  the  meaning  of 
Article 19 of Directive 2011/16/EU, and are or will be under an obligation to provide 
such wider cooperation to other Member States as well.  

The  conclusion  of  parallel  and  uncoordinated  agreements  by  Member  States  under 
Article  19  of  Directive  2011/16/EU  would  lead  to  distortions  that  would  be 
detrimental  to  the  smooth  functioning  of  the  internal  Market.  Expanded  automatic 
information  exchange  on  the  basis  of  a  Union-wide  legislative  instrument  would 
remove  the  need  for  Member  States  to  invoke  that  provision,  with  a  view  to 
concluding bilateral or multilateral agreements that may be considered appropriate on 
the same subject in the absence of relevant Union legislation.  

The  scope  of  Article  8  of  Directive  2011/16/EU,  should  be  extended  to  include  the 
following  items  covered  by  FATCA  and  related  agreements  by  Member  States: 
dividends, capital gains, other financial income and account balances, which are paid, 
secured  or  held  by  a  financial  institution  for  the  direct  or  indirect  benefit  of  a 
beneficial owner who is a natural person resident in other Member States. 

The  condition  that  automatic  exchange  may  be  subject  to  the  availability  of  the 
information requested as provided for in Article 8(1) of Directive 2011/16/EU should 
not apply to the new items as information about those items must necessarily be made 
available by financial intermediaries to tax administrations under the agreements with 
the United States as regards FATCA.  

The  reference  to  a  threshold  in  Article  8(3)  of  Directive  2011/16/EU  should  be 
removed since such a threshold does not appear to be manageable in practice.  

The  review  of  the  condition  of  availability  to  be  undertaken  in  2017  should  be 
extended to all the five categories referred to in Article 8(1) of Directive 2011/16/UE, 
so  that  the  case  for  exchange  of  information  by  all  Member  States  on  all  those 
categories be examined.  

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10)  This Directive respects the fundamental rights and  observes  the principles  which  are 
recognised in particular by the Charter of Fundamental Rights of the European Union. 

(11)  Since  the  objective  of  this  Directive, namely  the  efficient  administrative  cooperation 
between  Member  States  under  conditions  compatible  with  the  proper  functioning  of 
the  internal  market,  cannot  be  sufficiently  achieved  by  the  Member  States  and  can 
therefore, by reason of the uniformity and effectiveness required, be better achieved at 
the  level  of  the  Union,  the  Union  may  adopt  measures,  in  accordance  with  the 
principle of subsidiarity as set out in Article 5 of the Treaty on the European Union. In 
accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article,  this 
Directive does not go beyond what is necessary in order to achieve that objective. 

(12)  Directive 2011/16/EU should therefore be amended accordingly,  

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HAS ADOPTED THIS DIRECTIVE: 

Article 8 of Directive 2011/16/EU is amended as follows: 

(a) Paragraph 3 is replaced by the following: 

Article 1 

“3.  The  competent  authority  of  a  Member  State  may  indicate  to  the  competent 
authority of any other Member State that it does not wish to receive information on 
one or several of the categories of income and capital referred to in paragraph 1. It 
shall also inform the Commission thereof.  

A  Member  State  may  be  considered  as  not  wishing  to  receive  information  in 
accordance  with  paragraph  1,  if  it  does  not  inform  the  Commission  of  any  single 
category in respect of which it has information available."  

(b) After paragraph 3, the following paragraph is inserted:  

“3a.  The competent authority of each Member State shall, by automatic exchange, 
communicate  to  the  competent  authority  of  any  other  Member  State,  information 
regarding  taxable  periods  as  from  1  January  2014  concerning  the  following  items 
which  are  paid,  secured  or  held  by  a  financial  institution  for  the  direct  or  indirect 
benefit of a beneficial owner who is a natural person resident in that other Member 
State:  

(a)  dividends; 

(b) 

(c) 

(d) 

capital gains; 

any other income generated with respect to the assets held in a financial 
account; 

any amount with respect to which the financial institution is the obligor 
or debtor, including any redemption payments; 

(e) 

account balances. 

The first subparagraph shall not apply to the extent that the exchange of information 
at issue is ensured by paragraph 1 or by any other Union legal instrument." 

(c) Paragraph 5 is replaced by the following: 

“5.  Before  1  July  2017,  the  Commission  shall  submit  a  report  that  provides  an 
overview and an assessment of the statistics and information received, on issues such 
as the administrative and other relevant costs and benefits of the automatic exchange 
of  information,  as  well  as  practical  aspects  linked  thereto.  If  appropriate,  the 
Commission shall present a proposal to the Council regarding the categories and the 
conditions  laid  down  in  paragraph  1,  including  the  condition  that  information 
concerning residents in other Member States has to be available, or the items referred 
to in paragraph 3a, or both. 

When examining a proposal presented by the Commission, the Council shall assess 
further strengthening of the efficiency and functioning of the automatic exchange of 
information and raising the standard thereof, with the aim of providing that: 

(a)  the  competent  authority  of  each  Member  State  shall,  by  automatic  exchange, 
communicate  to  the  competent  authority  of  any  other  Member  State,  information 
regarding taxable periods as from 1 January 2017 concerning residents in that other 

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Member State, on all categories of income and capital listed in paragraph 1, as they 
are  to  be  understood  under  the  national  legislation  of  the  Member  State 
communicating the information;  

(b) the lists of categories and items laid down in paragraphs 1 and 3a be extended to 
include other categories and items, including royalties"  

Article 2 

1. 

Member States shall adopt and publish, by 31 December 2014 at the latest, the laws, 
regulations  and  administrative  provisions  necessary  to  comply  with  this  Directive. 
They shall forthwith communicate to the Commission the text of those provisions. 

They shall apply those provisions from 1 January 2015. 

When  Member  States  adopt  those  provisions,  they  shall  contain  a  reference  to  this 
Directive  or  be  accompanied  by  such  a  reference  on  the  occasion  of  their  official 
publication. Member States shall determine how such reference is to be made. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered by this Directive. 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 3 

Article 4 

This Directive is addressed to the Member States. 

Done at Brussels,  

For the Council 
The President 

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